Discussion over the Term Solvency Ratio

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PostPosted: Wed Sep 05, 2007 6:09 am   Post subject:   

Hi shil,

The regulatory body of the insurance industry (the IRDA in case of India) requires the insurance firms to maintain a specific amount of reserve over and above its liabilities. It is a fund put aside by the company to meet any emergency requirement of funds. It almost acts like the Capital Adequacy Ratio of the Commercial Banks. If at any point of time the company falls short of fund to pay out the claims which may lead the firm to liquidation, this extra reserve will help it to stay in business. However, it also has its own disadvantages, it reduces the amount of capital the firm can invest into the market and thus reduces its profit. ArindamSenIndies
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PostPosted: Tue Jan 08, 2008 7:57 pm   Post subject: what is the ratio of solvency margin for pvt life insurer?  

kindly explain with an eg if possible.
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